CALGARY, March 31, 216 /CNW/ – Connacher Oil and Gas Limited (CLC – TSX; “Connacher” or the “Company”) today announced that it has entered into a forbearance agreement (the “Forbearance Agreement”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent (or any successor thereto, the “Administrative Agent”) and certain lenders constituting the “Required Lenders” under the Credit Agreement in respect of US$153.8 million of loans made by the lenders (the “Lenders”) under the Credit Agreement, dated as of May 23, 2014 (as amended, restated, supplemented, or otherwise modified from time to time (including as amended pursuant to the Amendment No. 1 dated May 8, 2015), the “Credit Agreement”). Under the terms of the Forbearance Agreement, among other things, the Lenders agreed to forbear from exercising their enforcement rights and remedies arising on account of the failure of Connacher to pay the cash interest and principal payments due on March 31, 2016 until the earlier to occur of April 30, 2016, the occurrence of an event of default under the Credit Agreement, unrelated to the failure to pay principal and interest due on March 31, 2016, or the occurrence of a default or breach of representation by the Company under the Forbearance Agreement.
The failure to pay the principal payment due on March 31, 2016 and the failure to pay cash interest within the applicable grace period pursuant to the Credit Agreement each constitutes an event of default under the 12% convertible second lien note indenture dated May 8, 2015 (the “Convertible Note Indenture”). The Company is working with an ad hoc committee of the holders of the 12% convertible second lien notes (“Noteholders”) and will continue to work with the ad hoc committee during the forbearance period.
The Company continues to pursue its previously disclosed process to investigate, evaluate and consider possible financing and restructuring alternatives available to the Company, which is being carried out by a special committee of its Board of Directors. The Company does not intend to comment further regarding the review process unless a specific transaction or other alternative is approved by the Board of Directors, the review process is concluded or it is otherwise determined that further disclosure is appropriate or required by law.
Connacher is a Calgary-based in situ oil sands developer, producer, and marketer of bitumen. The Company holds a 100 per cent interest in approximately 435 million barrels of proved and probable bitumen reserves and operates two steam-assisted gravity drainage facilities located on the Company’s Great Divide oil sands leases near Fort McMurray, Alberta.